Online Merchandising: Pass Internet Sales Tax Collection

Friday

May 17, 2013 at 12:01 AM

Finally, something on which the vast majority of U.S. senators can agree: Internet shoppers should pay the same sales taxes as anyone else.

Finally, something on which the vast majority of U.S. senators can agree: Internet shoppers should pay the same sales taxes as anyone else.By a vote of 69-27, the Senate passed a bill May 6 that would allow the 45 states, including Florida, that charge sales taxes to make online retailers collect them from the states' residents.After divisive battles over gun control and the federal budget, the senators' consensus on the Marketplace Fairness Act is remarkable. So is the show of bipartisanship: Republican stalwarts such as the bill's sponsor, Mike Enzi of Wyoming, plus John McCain, Lindsey Graham and Lamar Alexander joined a majority of Democrats in supporting the bill.The Senate's overwhelming approval, however, isn't enough. The legislation now goes to the tax-averse House. While the House version also has a Republican sponsor and bipartisan backing, the support of businesses and constituents from the representatives' home districts could be crucial in determining the outcome.Such support is needed. The Marketplace Fairness Act deserves to become law.

QUESTION OF FAIRNESSAs the bill's title makes clear, what's at stake is simple fairness. Brick-and-mortar stores throughout those 45 states and the District of Columbia collect sales taxes from their customers. That includes major retailers such as Wal-Mart, Target and Best Buy that sell goods at stores nationwide as well as on the Internet.Why should other online purchases be exempt?The tax advantage of buying over the Internet threatens the viability of conventional, local stores and the jobs of the people who work there. Traditional stores are in many cases becoming showrooms, where shoppers inspect and choose items, then buy them online to avoid the sales tax.That online advantage hurts not only local businesses but state and local governments and the services they provide.Studies estimate that more than $12 billion in sales tax revenue is lost every year through Internet purchases. Economists estimate that Florida lost $454 million last year. That's money that could go to support schools, build roads and meet other vital public needs.Those numbers will continue to climb as more customers shop online. Last year, sales grew by 15 percent for Internet retailers, but by less than 5 percent for traditional stores. Amazon.com, the largest Internet retailer, had $61 billion in sales in 2012, compared with $5.3 billion a decade ago.

OPPONENTS' CLAIMSUnfortunately, not everyone supports the Fairness Act. The Senate's 27 opponents include anti-tax conservatives such as Florida's Marco Rubio and Texas' Ted Cruz, plus Democrats and Republicans from the five states that have no sales tax. They say, among other things, that the bill imposes an unfair tax increase and places a complex burden on small Internet retailers.The Internet tax would not be a tax increase. In most states, including Florida, customers are supposed to pay the sales tax on Internet purchases, but usually don't. What is proposed is a means of collecting that tax.The Senate legislation exempts online retailers that have less than $1 million in sales outside the states where they have a physical presence, such as a store or warehouse. States must also establish a single entity to receive and distribute Internet sales-tax revenue, and they must provide software to help retailers collect the taxes.Such concessions helped create the overwhelming Senate support. Whether they're enough to sway a House majority is the question. But there's hope.The House bill's main sponsor is a Republican, Steve Womack of Arkansas. The bill has 65 co-sponsors, almost half of them Republican.In addition, House members, given their relatively small districts and two-year election cycle, are usually more responsive than their Senate counterparts to local constituencies such as retailers and their employees.Those constituents — and all who support a fair tax system — should encourage their U.S. representatives to vote for the Marketplace Fairness Act.